If you haven’t already begun diversifying your investment portfolio beyond U.S. borders, consider this your alarm sounding.
Most investors would agree that this is no time to be 100% in the U.S. stock market. The question is where should you place your capital instead?
We say real estate overseas. We like hard assets, and, while U.S. property markets are near bubble territory, many others around the world are bona-fide bargains.
How can you choose where to buy, especially if you’re shopping for the first time?
Don’t chase promises of high yields in Bulgaria if you have no desire to be in Bulgaria.
That is to say, start by understanding why you’re in the market in the first place. Are you shopping for personal use or for straight-up profits? If all you care about are the returns, then a case could be made for Bulgaria even if you hope never to have to go there.
This is a hotly debated topic here at Live And Invest Overseas. Some like my husband, Lief Simon, maintain that if you’re buying to make money your personal opinion of the place is irrelevant.
Thing is, if you invest in Bulgaria, you should go at least once to see the place for yourself. If you buy a rental property, you should plan to return once a year to check on the property and meet with your rental manager. You don’t want to dread those trips.
That’s why I recommend focusing on destinations where you’d enjoy hanging out. Consider places we spotlight, including Portugal, Spain, Montenegro, Northern Cyprus, and Greece. These countries offer good investment opportunities right now and will continue to do so long-term.
These aren’t the only places you can find good real estate cash-flow investments overseas, but if one or more of the destinations top of our list appeals to you as a place to visit, then that’s a place to start.
If you vacation internationally, think back over places you’d like an excuse to return to, then look into current local real estate opportunities.
If you like to dive, beach and diving destinations in the Mediterranean should be at the top of your shopping list. If you’re a fan of classic architecture and Old World history, look first to Europe’s classic cities. Sailors might look in locations with marinas. Surfers could prioritize countries with big breaks.
You get the idea.
Make a list of at least three destinations before planning your first scouting trip. Give yourself options for where to go. You could find that the place you are most excited about doesn’t make sense once you hit the ground.
In each location you visit, schedule time both to view properties and to have fun. Always remind yourself that buying property overseas isn’t only about the money. This is as much about reinventing your lifestyle as it is about building a portfolio. Plan out your visit but leave yourself time to wander around. Walking is the best way to get a feel for a place. When you get to town, hit the streets to get the lay of the land for yourself before meeting with a real estate agent.
Allow time to meet with a real estate attorney and maybe a bank during each scouting trip.
You might find real estate agents resistant to scheduling viewings until you’re in the country. If they’ve worked with foreigners in the past, they’ve been burned by people changing their plans and not showing up without warning.
In some tourist markets, real estate agents who’ve wasted time with looky-loos killing time on vacation might ask you to pay a fee for them to show you around. Respect the real estate agent’s time.
Real estate attorneys on the other hand should be willing to schedule an appointment before you get on a plane as long as you have a solid date for when you’ll be in the country.
If you don’t have a lead for a good real estate attorney before you arrive, ask real estate agents you’re working with for suggestions. Also check the U.S. Embassy website for each country on your list. It should include a list of English-speaking attorneys by specialty. Interview at least two in each location.
Before you get on a plane, do as much research online as you can to get an idea of property prices in your target locations. We Americans are used to being able to search for comps on websites like Zillow. No such services exist in most markets outside North America, because almost nowhere else in the world operates with a multiple listing service.
To get an idea of what’s available in a market, you have to speak with several real estate agents and see a range of properties. Agents don’t cooperate with each other in many markets, so it’s not disloyal for you, the buyer, to work with several different ones. It’s the only way to get a proper overview of what’s available for sale.
While the Internet is a good place to start looking, any foreign property listings you find searching online in English are going to be priced at a premium. To break through the foreigner-pricing barrier, research online in the local language. Online translators make it easy.
Another important connection to make during your initial scouting trips is with a rental management company. The rental manager is key to success with a cash-flow investment anywhere. Some real estate agencies offer rental management services. Depending on the market, this can be the best option. Before committing, though, research the availability of independent management.
Finally, when scouting a new market and even when returning to a market where you have experience, try to speak with other foreign property owners and investors. I’m not talking about the geezer in the corner of the local bar who knows everyone and thinks he knows everything. He’s usually a time sucker talking to hear himself talk.
Make an effort to connect with serious people with firsthand experience in the market. Your real estate agent and attorney should have clients they could introduce you to, and social media makes it easy to connect with like-minded people anywhere on the planet.
Until next time,
